The role of social banking

03.10.11 www.social-banking.org The role of social banking Katharina Beck, 02 October 2011 Internazionale a Ferrara, Italy

03.10.11 www.social-banking.org The Institute for Social Banking
Summer School on Social Banking
Certificate in Social Banking
Introduction and Expert Seminars
Knowledge generation

Different faces of banking 03.10.11 www.social-banking.org Pictures: http://hookz.killing4space.de/?p=903, Zukunftsstiftung Landwirtschaft

03.10.11 www.social-banking.org "If the people knew tonight, exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning.“ Abraham Lincoln Banks are „kind of“ relevant...

03.10.11 www.social-banking.org Demonstrations on Brooklyn Bridge, „Occupy wall street“-movement, 1st October 2011, New York. Picture taken from www.tagesschau.de

03.10.11 www.social-banking.org Europe

03.10.11 www.social-banking.org Values: Trasparency, Participation, People,... "The highest interest is for all.“ "Banking for a Sustainable Future“ "Money is there for people!“ "Consultation for giving. Funding and support for charitable institutions.“ "Managing money consciously“ "A different bank for people who want a different world.“ "Today's bank for a better tomorrow.“ "Committed to social justice within a sustainable economy“ "Our values: ethics, transparency, solidarity“ „ Supporting socially responsible places of residence and work“ Social-ecological

Bank
Intermediary
Allocates money
Maturity transformation
Risk transformation
Information
03.10.11 www.social-banking.org Banks as „simple“ intermediaries Those who have money Those who need money / real economy asset loans Basis: TRUST 2. Social Banking

A „normal“ service 03.10.11 www.social-banking.org Picture: Katharina Beck

03.10.11 www.social-banking.org Understanding money as a tool Different qualities of money

Publication of financed projects, e.g. Triodos 03.10.11 www.social-banking.org/summer-school

Examples for criteria 03.10.11 www.social-banking.org

03.10.11 www.social-banking.org Social Banking

03.10.11 www.social-banking.org Multi-dimensional core business Combining several dimensions.

Global Alliance for Banking on Values 03.10.11 www.social-banking.org www.gabv.org

03.10.11 www.social-banking.org Banking with the poor Picture: Oikocredit Social Performance Report 2010, p. 3. Micro-finance

GABV: Different approaches

03.10.11 www.social-banking.org 13 GABV Banks: world Balance Sheet (2009/10) in Mio. US $ No. of Customers ABS 898 24000 Banca Etica 973 40000 BancoSol 495 390000 BRAC 1366 898000 Cultura Bank 66 4200 GLS Bank 2000 100000 Integral 75 42000 Merkur 290 16000 Mibanco 1586 500000 New Resource Bank 159 2000 OnePacificCoast Bank 99 800000 Triodos Bank 4311 500000 Vancity 13640 750000 Xac Bank 223 225000 TOTAL 26.181 4.251.200

Performance of balance sheets: Europe 03.10.11 www.social-banking.org

Comparing some monetary numbers... 03.10.11 www.social-banking.org „ It is unclear how much money exists in the world .“ (P. Dembinski) Social banks in Europe: Balance sheets (2009/10) 9 Bn. € GABV banks: Balance sheets (2009/10) 19 Bn. € National Budget of Italy (2009) 785 Bn. € GDP Italy (2010) 1‘773 Bn. € National Debt Italy (2011) 1‘890 Bn. € BNP Paribas: Balance sheet (2010) 2‘960 Bn. € SRI (Europe, incl. broad SRI, 2010) 5‘000 Bn. € GDP worldwide (2010) 60‘000 Bn. € „ Value“ of derivatives worldwide (BIS; 2008) 600‘000 Bn. €

People seeking „sense“ 03.10.11 www.social-banking.org Pictures: www.brandeins.de and www.yogamob.org

Social banks‘ uniqueness and role 03.10.11 www.social-banking.org
Role models / reference (long-time experience, focus on real economy and the human being, „True“ eco-social goals, participation, transparency)
Thought leadership (focus on relation and not transaction, proposals for regulation)
Values and focus on the human being („dare to be different“)

Challenges for Social Banks (Europe)
Inconsistent customer demands (security und return vs transparency and responsibility)
Conversion rate to loans decreases (Are there enough „investible“ eco-social projects in the „real economy“?)
Finding the „right“ new co-workers (Values and dilemma competence)
Low interest rates (investment banking pays off better than conventional banking)
Basel III and regulation (e.g. for GLS Bank)
Maintaining uniqueness while larger banks adopt sustainability strategies with much larger marketing budgets
03.10.11 www.social-banking.org

03.10.11 www.social-banking.org Money in the digital world? http://www.youtube.com/watch?v=ekF8Zsv5F3w The future of money? New currencies? Giving and donations Social Media

Financial sector: „de-humanised“? 03.10.11 www.social-banking.org
Over 500.000 structured financial products (not easy to understand)
Much higher „value“ in derivatives than in GDP („unreal“?)
Computerisation / Digitalisation („the human element“?)
„ Transactionitis“ (vs relations)
Speed
„ Traders more destructive than psychopaths“ (Study of the University of St. Gallen, 2011)

03.10.11 www.social-banking.org Who is in charge? Change on a system level Change on an organisational level Change on an individual level Global markets – „ local“ regulation. Pictures: taken from google pictures.

„ Social Banking“ proposals for solutions 03.10.11 www.social-banking.org
Separation of retail and investment baking
Financial transaction tax
Closing of tax havens
Only allow what we can understand (simple and transparent financial „products“).
Make OTC public and transparent.
Rating agencies shall be paid by financial services tax.
Increase financial literature.
Change incentive structures.
=> Back to „ boring “ (Max Otte), human banking?

Katharina Beck Director | Institute for Social Banking Christstr. 9 44789 Bochum [email_address] 0234 / 60 60 01 32 www.social-banking.org 03.10.11 www.social-banking.org Thank you! Picture: Katharina Beck. The pictures belong to the Institute for Social Banking if not otherwise indicated

Social Banks (in the North)
Explicit self-perception as intermediary to depositors and borrowers
Main goal: contribution to further the common good
No profit maximisation and perverted incentive / bonus structures
No speculation
Needs in the real economy / society
Ownership structures that help prevent short-termism
Triple bottom line / positive and negative criteria
Transparency (e.g. publication of loans)
Reflection of motives (why?), actions (what?) and approaches (how?)
03.10.11 www.social-banking.org

The role of social banking

by Katharina Beck on Oct 03, 2011

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